Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<ul>
<li>The Nikkei is now down 9.57% vs. when we first recommended our skew trade (now up 0.40%). </li>
<li>Despite some frustrating idiosyncratic moves which have prevented the skew trade from outperforming more it has mostly held up. </li>
<li>Looking forward, we believe it is worthwhile assessing upside and downside macro risks for the components of the trade.</li>
</ul>


The Nikkei is now down 9.57% vs. when we first recommended our skew trade (now up 0.40%). 
Despite some frustrating idiosyncratic moves which have prevented the skew trade from outperforming more it has mostly held up. 
Looking forward, we believe it is worthwhile assessing upside and downside macro risks for the components of the trade.


TOPIX-Nikkei Skew Trade – Updates Factoring in Ukraine

Equity Bottom-Up

<ul>
<li>We spoke to Yaskawa today to understand recent trends and the detailed outlook on demand going forward. </li>
<li>There were no major surprises with the company still relatively positive on demand remaining strong across the board though only robots seem to offer strong growth potential. </li>
<li>Profitability for robots should also improve going forward creating a nice story, but valuations are still too dear.</li>
</ul>


We spoke to Yaskawa today to understand recent trends and the detailed outlook on demand going forward. 
There were no major surprises with the company still relatively positive on demand remaining strong across the board though only robots seem to offer strong growth potential. 
Profitability for robots should also improve going forward creating a nice story, but valuations are still too dear.


Yaskawa – Increasingly Positive on Robotics but Still Too Early… Except…

<ul>
<li>After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.</li>
<li>It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. </li>
<li>Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.</li>
</ul>


After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.


TOPIX-Nikkei Skew Trade Starting to Work Nicely

<ul>
<li>Fanuc results were a little better than the in-line we expected on account of a big jump in Robot segment sales. </li>
<li>Given relative margins however, the impact at the OP line was limited and Fanuc’s revised guidance is now just under consensus for the year. </li>
<li>Much of the recent strength in FA and Robots looks unsustainable and we suspect this result may be taken negatively.</li>
</ul>


Fanuc results were a little better than the in-line we expected on account of a big jump in Robot segment sales. 
Given relative margins however, the impact at the OP line was limited and Fanuc’s revised guidance is now just under consensus for the year. 
Much of the recent strength in FA and Robots looks unsustainable and we suspect this result may be taken negatively.


Fanuc – Big Robot Beat Flops on the Margin Side

<ul>
<li>A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. </li>
<li>Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. </li>
<li>Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.</li>
</ul>


A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. 
Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. 
Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.


TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

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Fanuc Corp (6954 JP)

TOPIX-Nikkei Skew Trade – Updates Factoring in Ukraine

The Nikkei is down 9.57% vs. when we initiated our skew trade (now up 0.40%). Despite some frustrating idiosyncratic moves the trade has mostly...

Mio Kato

Yaskawa – Increasingly Positive on Robotics but Still Too Early… Except…

Yaskawa's Robotics segment offers intriguing growth potential but we remain concerned about a tech capex peak out. However, as a long hedge the...

Mio Kato

TOPIX-Nikkei Skew Trade Starting to Work Nicely

After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off. It is now...

Mio Kato

Fanuc – Big Robot Beat Flops on the Margin Side

Fanuc results were a little better than the in-line we expected on account of a big jump in Robot segment sales. Given relative margins however,...

Mio Kato

TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

Volatility in Fast Retailing and Sony have hurt the performance of our skew trade but looking forward we expect recent volatility to be absorbed...

Mio Kato

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Market Cap (USDm)

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